After the last three years of financial crises and bailouts, no one can deny that leadership of an international institution like the International Monetary Fund matters. Previous leaders brought some significant changes to the IMF but did not go nearly far enough. The fund is still giving bad advice to European countries, such as supporting the fantasy that Greece can recover without restructuring its debt, and is continuing to force damaging spending cuts in times of recession. The question now is whether Christine Lagarde's tenure as managing director of the fund will be any better.

The signs are not good. The first issue facing the IMF is its legitimacy, which has been further damaged by the hypocrisy of a selection process that was neither truly fair and open nor merit-based. As much as the executive board has tried to paper over the facts, the rushed de facto appointment of Christine Lagarde by European powers circumvented the official process and contravened numerous commitments made by global leaders over recent years.

Lagarde's success is likely to become a pyrrhic victory for Europe. While some emerging markets may have thought the IMF was slowly reforming, this selection process will underline how little they can trust international institutions that continue to be controlled by the rich. They will move further towards regional and self-insurance, and balk at international co-operation through the IMF.

The IMF's legitimacy is not only derived from its leader, but also from who holds power. Developing countries are not likely to forget the fierce resistance to IMF voting reform put up by Lagarde twice during her tenure as French finance minister. As recently as last year, Lagarde and her European colleagues blocked a significant rebalancing so that votes would better reflect the changing global economy, let alone allowing a far-reaching reform to bring democracy into the institution.

As a result of two rounds of reform, EU countries will drop just a few percentage points, from 32.7% of the vote to 29.4%, despite having just 7.3% of the world's people.

With the IMF's legitimacy in tatters, could it fall back on its credibility? There is precious little of this left after the fund failed to spot the biggest financial crisis in 80 years. The rest is being squandered by the IMF serving as the junior partner in Europe's destructive bailouts of private creditors and punishment of ordinary eurozone citizens in Greece and Ireland.

The IMF-EU policies towards Greece are just not working, with soaring debt levels, rising joblessness, a contracting economy, and deepening social crisis – yet Lagarde's first instinct after the announcement of her appointment was to continue pushing the country towards a downward spiral of austerity, unemployment, and recession. Despite rumours that some IMF staff – having witnessed the implosion in Argentina – recognise the folly of this plan, it seems highly unlikely that Lagarde, a lead architect of the European response to Greece, would change tack now.

Without legitimacy or credibility, the IMF can not tackle the long-term global economic problems that it was designed to deal with but has abdicated from responsibility for since the 1970s. There were signs that the IMF under Dominique Strauss-Kahn, reeling from the intellectual blow dealt to its ideology by the financial crisis, was ready to wade back into issues like the sagacity of relying on the US dollar as the world's main trading and reserve currency, or the problems generated by unrestrained financial flows whipping into and out of countries at the blink of an eye. These may seem esoteric, but such issues left unreformed mean the current international financial architecture will continue to damage the prospects of poor countries and tilt the global economy towards the benefit of financiers, rather than ordinary people. Lagarde's tenure as the chair of the G20 finance ministers demonstrated an unwillingness for the wholesale reforms needed.

Lagarde's pitch seemed to be mainly managerial. She promises to fulfil the duties required of the managing director. Her main talking point during the campaign was the need for diversity in the staff at the IMF, with a focus on gender. That is as close to a campaign promise as we have had from her, a clear indication that she is not the reformer that the fund, and the poor and vulnerable people negatively affected by the IMF's policies, badly need.

Lagarde's assumption of control, while a bad omen for Europe's periphery and aid-dependent countries in Africa, will be seen by critics in developing countries as a boon, a chance for those that are able to even further distance themselves from an out-of-touch, outmoded international institution.